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Emilie GUEREMY - emilie.gueremy@cofaris-evaluation.com

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Press citations

Housing Loans: new obligations on banks. Article published in infoimmo.fr

From 1 July 2016 banks must comply with the obligations of the European Mortgage Credit Directive which requires them to “harmonise valuation standards on residential property subject to a credit application”. This means that they will have to use an independent and qualified expert to determine whether a loan can be granted.

On 2 May 2016 Journaldelagence.com published an article which made reference to Cofaris Evaluation and the legal provisions which the Mortgage Credit Directive will enact.

The Mortgage Credit Directive 2014/17/EU adopted by the European Parliament aims to harmonise residential property valuation standards whether the property is mortgaged or not.

Terms such as “responsible lending”, “bank risk”, “property valuation standards” and “LTV ratio” - these are all covered in the article, terms which are bandied about every day by Cofaris’ employees who are experts in the area.

On 22 April 2016 aucoeurdelimmo.com published an article on the new European directive and regulations on the grant of housing loans.

The writer looked at the obligations on banks and the effects of these for consumers. The credit worthiness assessment will be strengthened. Under forthcoming legislation, banks will be able to carry out property valuations. Forthcoming legislation will not in principle establish a minimum level above which the procedure will be compulsory. “Some banks already use our services” added Sébastien Duchesne, Director of Valuation for Cofaris Evaluation. “If a consumer asks for a €400,000 loan to buy a house and we find that it’s only worth €350,000 then it will be up to the borrower to put up the remaining €50,000”.

Explorimmo contacted Cofaris Evaluation after the incorporation of Directive 2014/17/EU into French Law in March to find out what ability we have to meet the property assessment requirements of French banks.

Forthcoming legislation will not establish a minimum level above which the procedure will be compulsory. “Some banks already use our services” added Sébastien Duchesne, Director of Valuation for Cofaris Evaluation. “If a consumer asks for a €400,000 loan to buy a house and we find that it’s only worth €350,000 then it will be up to the borrower to put up the remaining €50,000”.

A difficult process for first time buyers? “It’s a risk but it will also stop people buying any old property at no matter what price. The situation will depend on the financial situation of the bank” cautions Sébastien Duchesne. A situation to make already low interest rates rise steeply to convince the bank to agree. As for the cost of the valuation it will be added to the ancillary costs of the borrower. The pill might be somewhat bitter to swallow for some people. "

In particular the journalist addressed the idea of “responsible lending”. “The new measures of the Mortgage Credit Directive aim to create a European-wide mortgage credit market and to implement better information and protection for consumers”, says Cofaris Evaluation, a specialist in property valuation. In a nutshell, to put an end to irresponsible lending for buying residential property. In addition to the credit worthiness assessment on the borrower, the lender is required to warn the borrower. “It’s a symbolic post sub-prime crisis law which underpins a new approach to awarding loans” says their director.

The European Mortgage Credit Directive has not been widely reported in the press, Nevertheless the directive which must be incorporated into the national law of member states (including France) within the forthcoming weeks will shake up the process of awarding loans. This includes the obligation for lending banks to use a recognised expert to assess the value of residential property to which the loan applies. Explanations with Sébastien Duchesne, director of Cofaris Evaluation, specialist in property valuation.